ACC rating – Buy: Muted show in Q1CY22 along expected lines Q1CY22 was a muted quarter for ACC (Ebitda plunging 26% y-o-y; though up 14% q-o-q). However, most of this is priced in in our view given Ebitda broadly matched Street’s and our expectation. In the wake of sharp price hikes across regions – to pass on industry-wide impact of surging fuel prices – we see limited risk to earnings. The recent buzz of a potential stake sale by global parent Holcim Group (HG) should drive outperformance, in our view. The current valuations of $100 EV/t deserve a premium (in case of a sell-off) given ACC is one of the strongest brands and has a pan-India network. With ACC’s efforts to enhance efficiency being in focus, we maintain ‘Buy’. Outperformance in store: We expect ACC to outperform given: (i) Undemanding valuations of 10.9x CY22e and 8.8x CY23e EV/Ebitda. (ii) In case the parent’s stake is on the block, ACC deserves a premium for its strong brand and pan-India network. We continue to value ACC at 13x EV/Ebitda and maintain ‘BUY/SO’.
The launched works involve rehabilitating the Galgamuwa Railway Station and upgrading the railway line from Maho to Anuradhapura, including additional tasks. Another project is the second phase of track rehabilitation from Maho to Omanthai (128 kms), funded by a $318 million Indian Line of Credit.
Transport Minister Gunawardena praised the efforts of Indian company IRCON in Sri Lanka and called for more cooperation in the railway sector. State Minister Shantha Bandara and officials from the Sri Lankan Ministry of Transport attended the event.
Railways is a priority for Indian assistance in Sri Lanka, with over $1 billion invested under five Indian Lines of Credit. IRCON has been involved in Sri Lanks since 2009. It has contributed to the modernisation of Sri Lanka Railways by reconstructing the entire railway line network in the Northern Province (253 Km) and upgradation of the Southern line (115 km), as well as improving safety through advanced signalling and telecommunication systems.
Despite Sri Lanka’s debt standstill in April 2022, India’s support under various Lines of Credit has continued.
(With PTI inputs)